New to this site, and relatively new to investing (one investment property). I am wanting peoples opinions and ideas regarding written offers to purchase residential property.
I recently inspected a premises for sale (a deceased estate) and it stacked up well as an investment property. I did my maths and researched a little further about that particular area and I eventually came to a figure below the asking price, but I could justify it with recent area sales and such.
The offer form/contract came in on the fax machine at work, so I filled my boss in with what I was doing. He suggested making an offer really low regarding this property to see what the sellers response would be, or 'test the waters' so to speak.
I don't want to offer so low that they reject it immediately, and I don't want to be offensive - but my boss seems to believe that it sparks the negotiation stages.
New to this site, and relatively new to investing (one investment property). I am wanting peoples opinions and ideas regarding written offers to purchase residential property.
I recently inspected a premises for sale (a deceased estate) and it stacked up well as an investment property. I did my maths and researched a little further about that particular area and I eventually came to a figure below the asking price, but I could justify it with recent area sales and such.
The offer form/contract came in on the fax machine at work, so I filled my boss in with what I was doing. He suggested making an offer really low regarding this property to see what the sellers response would be, or 'test the waters' so to speak.
I don't want to offer so low that they reject it immediately, and I don't want to be offensive - but my boss seems to believe that it sparks the negotiation stages.
What are your personal opinions and experiences?
I generally work out two prices: 1) What I would like to pay (typically lowball) 2) The maximum number I will pay (any higher and the investment doesn't stack up)
I'll try to get a feel for the vendor's position from the agent, and will use phrases like "it's just an investment property, at the right price I'll buy it today", and "I'm looking at a few properties over the next week or so, given it's just for investment I'll buy whichever accepts my offer first", and "if I don't buy from you today, no problems, it might be you I'm buying from next weekend".
Good agents will try to qualify you as a buyer, and you need to be ready for this. Have a story about your investment strategy ready, doesn't have to be detailed. Speak to the bank first so you can work out if you will get the finance you need, and if the stars align don't faff around for days 'thinking about things', just make the offer and run with it.
Depending on where you want to buy, the best time has probably past (definitely for Sydney), but give it a crack. Be prepared to negotiate, but be prepared to walk away once you get past your maximum price.
New to this site, and relatively new to investing (one investment property). I am wanting peoples opinions and ideas regarding written offers to purchase residential property.
I recently inspected a premises for sale (a deceased estate) and it stacked up well as an investment property. I did my maths and researched a little further about that particular area and I eventually came to a figure below the asking price, but I could justify it with recent area sales and such.
The offer form/contract came in on the fax machine at work, so I filled my boss in with what I was doing. He suggested making an offer really low regarding this property to see what the sellers response would be, or 'test the waters' so to speak.
I don't want to offer so low that they reject it immediately, and I don't want to be offensive - but my boss seems to believe that it sparks the negotiation stages.
What are your personal opinions and experiences?
Don't worry about being offensive. It's not a popularity contest. Don't worry about what the agent says or bleats. He/she is legally obliged to forward written offers promptly, and anyhow he/she will be happy if it is accepted.
What you do rightly identify as being a risk is having the offer rejected out of hand. The vendor doesn't actually have to respond to your offer. So make sure you specify a time beyond which the offer lapses, just in case.
What you want is to make an offer high enough that the vendor responds that is still somewhat close to what you would ideally like to pay. For deceased estates, it can be very helpful if you can make an offer not subject to finance and with a very short settlement period. If you have a bunch of siblings arguing over probate, the executor might just say "fuck it" and accept the offer if it means they can wrap the job up. (Obviously you have to have the cash on hand in order to do this, and even then 2 weeks is pushing very hard.)
Be prepared to walk away. Come back in a fortnight with a slightly higher offer if it still hasn't sold.
If you make an offer on Friday, specify that any acceptance that reaches you after 3pm on Friday will be deemed to have been received at 9am Monday. It's an absolute bitch to get deposits paid over the weekend and you can get gazumped if someone makes an offer and you don't have cleared funds in the trust account by COB of the 3rd calendar day after acceptance of the offer (i.e. the only way to achieve that is carry cash or a bank cheque to the agent on Monday, which may not b feasible.)
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